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Question mark over shale gas around the world - BP's Bob Dudley

Tuesday, August 7, 2012

There is enough oil and gas resources on the planet to meet world demand, but future constraints likely to be above ground, said Bob Dudley, CEO of BP, speaking at the British Business Embassy 'Energy Summit' on August 7. And there is a question mark over how far shale gas will go around the world

'The good news is that sufficient resources do exist to meet these challenges on the planet,' said Bob Dudley, CEO of BP, speaking at the UK Government's British Business Embassy 'Energy Summit' on August 7.

'Over decades ahead, constraints on energy supply are very likely to remain above the ground rather than below it.'

'They are to do with creating the right markets, the right infrastructure, the right conditions for these resources to be brought to consumers at affordable price.'

'The lesson from history is where governments act to provide an open and competitive market industry comes along and supplies the infrastructure. The UK is a great example of that.'

The government here in the UK has encouraged investment in the North Sea. Over the next 5 years we will invest £10bn.

'The shale boom in the US is, I think, one of the greatest revolutions in the energy industry in the last 15 years. It has changed economics, it has changed geopolitics, and I think it's here to stay,' said Bob Dudley, CEO of BP, speaking at the British Business Embassy 'energy summit' on August 7

'The question mark on how far it will go around the world.'

'In places like Oman the government invited companies to compete to develop giant tight gas resources is another example of potential change.'

'That's where we're applying some of the techniques developed in North America.'

'We need to do again what we did in North Sea and go to new remote frontiers in search of reserves.'

'That's the fate of our industry. It means going to deeper waters and using new technologies to explore largely untapped geology, such as the Palaeogene layers in the Gulf of Mexico.
High temperature, high pressure, very deep.'

'Developing oil and gas found in shale formations, the kind that have transformed America's energy.'

'It means going to the Arctic and heavy oil deposits of Canada where we have to proceed with great great sensitivity.'

'It means developing alternatives to fossil fuels, such as sustainable biofuels, bringing wind and solar to viability.

'[Renewables] will be the fastest growing energy. It will move from about 2 per cent to around 7 per cent by 2030. It gives you a sense of how far we have to go.'

'It means maximising yields from fields and lengthening the lifespan of the infrastructure.'

'I think we are entering a new phase of complexity.'

BP's history

'BP was founded just over 100 years ago in this city [London]. In fact, explorers struck oil during the 1908 [London] Olympic Games,' he said. 'Fortunately for everyone involved it was in a different venue.'

'The company was formed after its explorers struck oil in the Persian deserts. A century on, some things have changed, others have stayed the same.'

'We're now a global company using very different technologies and techniques.'

'Today, we have people looking for oil and gas all over the world, in places like China, the US, Angola, Australia Brazil, and here in the UK, right now just West of Shetland.'

'We've also developed a downstream part of the business - people tend to see us through our network of 1000 service stations, if not through our research centres, schools links educational programs.'

'Then of course there is the North Sea. In the 1970s after the wave of nationalism in the Middle East and elsewhere, the company was obliged to make its living on its own industry's frontiers, here.'

'One of the most important was the North Sea, following the discovering of the Forties field.
The North Sea took off.

'It was a great incubator of engineering. It was 'the place to go' in oil and gas industry, where all the new technologies were being forged and tried on the very frontiers of mankind.'

'I still find it exciting to land on a North Sea platform, it is quite extraordinary.'

'I believe Britain is well placed to have a continuing influence on the industry no doubt.'


'I think tomorrow's energy landscape will be very different from today's.'

'In the 20th century demand came from countries that industrialised in 19th and 20th centuries.

'In the years ahead we expect demand to be flat or declining in the developed world.'

'However demand from non OECD countries is soaring. Last year it rose over 5 per cent, with 70 per cent of growth coming from China.'

'Altogether we expect energy demand to rise by 40 per cent by 2030. It is not that far away. This is the equivalent of a whole another whole China being formed, another US being formed.

'This creates a tremendous challenge for mankind and certainly a challenge for the energy community.

'The first challenge will simply be to provide enough energy to meet the demand.'

'The second will be to help countries attain energy security by maximising their domestic production and build strong supply chains around the world.'

'Third we'll need to produce and consume energy as efficiency as possible.'

'We'll need to use more energy from low carbon sources, ensure challenges of efficiency security and sustainability will be right in front of us from now on.'


'As you know we experienced a terrible tragedy 2 years ago in the Gulf of Mexico,' he said. 'We lost 11 colleagues. It has been an experience we have been determined to learn from and change.'

'Inside our company we've set up a new powerful safety and operational risk organisation to work alongside our line management to coach, advise, intervene if necessary in what we do.'

'We've reshaped our organisation upstream globally into 3 divisions to drive consistency across the company.'

'We've brought in experts from high hazard industries. We've brought in pilots, astronauts, accident investigators, mining engineers and military leaders to provide a fresh perspective. It has changed the way we think.'

'We've set ourselves new standards that go beyond regulatory requirements such as insisting that blow out preventers with floating rigs have new standards.'

'We've also been sharing our lessons with industry colleagues and governments around the world.
Working with groups such the International association of Oil and Gas producers (OGP)'.

'All of these actions are examples of continously improving how safety and risk are managed the company. There's no question now that this will be a trend in our industry.'

'The future is not only about risk, it is also about complexity - more complicated geology, sophisticated processes.'

Focus on what you are good at

'There are 2 responses to complexity, I think,' he said.

'Number 1 is to try to master everything yourself.'

'The other is to focus on what you are really good at and become world class at it and work in partnership with people who have other assets and capabilities. That's going to be our approach going forward.'

'We've identified our core strengths as exploration, the management of giant fields; gas supply chains, deepwater operations and a world class focussed downstream business.'

'We're going to underpin that with technology and research and relationships.'

'It is important to have a very clear understanding of the strengths you can bring to a partnership.'

'It is important to understand what other parties want from a relationship.'

'This means understanding the priorities of government as they look to enhance domestic production, raise prosperity of people in the country.

'It is also about increasing energy security, raising revenues and building capability.'

'One such investment has been the Energy Technology Institute (ETI) in the UK. It is a public private partnership between the UK government and organisations including Shell, BP, Shell, Caterpillar, EDF, EON, Rolls Royce.'

'ETI brings together the collective knowledge of diverse members to further address energy challenges in the UK.'


'We are doing work in places all around the world like Iraq, Azerbaijan, Angola, India,' he said.

'In China we've invested $5bn over 3 years - we have 30 joint ventures with Chinese partners.
They span every stage of the supply chain from exploration in South China Sea with CNOOC to retailing with Petrochina.'

'We're partnering with Chinese universities, Chinese academy of sciences. We are bridging those institutions with great institutions here in Britain.'

'Partnerships with academic institutions are vital for progress.'

'With Britain having so many world class university departments it is no surprise that we spend about 40 per cent of our R+D here in the UK.'


'We look back on a century when Britain played a big part in overcoming challenges of energy production. We look ahead to a century where challenges will be even tougher,' he said.

'As an industry we'll need to play to our strengths. We need to form new partnerships with governments, NOCS, IOCs, suppliers, governments, contractors, academics.'

'In 21stth century as in 20th we can expect much of the technology and the capability that is used to provide energy, I think, to be designed and developed in Britain, if not literally made in Britain.'

Associated Companies
» BP

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